기업혁신과 지배주주 통제권 = Corporate Innovation and Controlling Power

다국어 초록 (Multilingual Abstract)

This study analyzes the relationship between corporate innovation, corporate governance, and ownership structure. The ownership structure of Korean companies needs to be approached from the viewpoint of the principal-principal-agent problem where there is a conflict of interest between the controlling shareholder and minority shareholders rather than traditional principal-agent problem where ownership and management are separated. Under the context of corporate governance in Korea, a controlling shareholder is one of the most important corporate decision maker. Based on the agency theory, the controlling shareholder can represent a rent-seeking behavior and a risk-averse tendency due to a premium on controlling rights. Thus, the controlling rights of the dominant shareholder can create an entrenchment effect and impede corporate innovation. According to the resource dependence theory, the diversified ownership structure can increase the level of innovation based on the resources possessed by stakeholders other than the controlling shareholder. Corporate governance can have a positive effect on innovation in terms of promoting the efficiency of resource allocation, and generally, it is known that improving governance promotes corporate innovation. By using a patent registration count of each corporation from 2011 to 2016, I find that the power of a controlling shareholder is negatively related to the level of corporate innovation. And, the level of corporate governance is positively related to the level of corporate innovation. Moreover, the negative relationship between corporate innovation and the controlling power of a dominant shareholder is prominently featured in sound governance. This study suggests the different results of the previous studies which argue the negative effect of ownership increase on the agency cost. In addition, additional implications and contributions to the results of the existing literature can be found in that higher innovation can be achieved with the weak power of the dominant shareholder when the level of governance is premised. This study shows that improving corporate governance, which can undermine shareholder value, is a way to achieve a high level of innovation. A high level of business innovation can ultimately improve corporate productivity. In conclusion, it suggests that the control of the dominant shareholder’s excessive power is a policy consideration for long-term growth and productivity increase. The level of corporate governance related to the protection of shareholder rights is a necessary condition for the innovation of the company. The target for innovation growth of the government is mainly focused on the technological innovation of a corporation, but the improvement of the corporate governance structure can also lead to high productivity as a factor driving the innovation of the company.

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